neolfascism is a danger in this era of neoliberalism

Neofascism and Neoliberalism: What’s the Connection?

“They that sow the wind, shall reap the whirlwind.” Neoliberalism as an ideology and a movement demonstrates the truth of this biblical adage. Neofascism is the whirlwind.

The neoliberals sowed the wind with the false promise of the self-regulating market as the efficient and just allocator of resources. Instead, the latter instigated the world financial crisis of 2008 and the longer-term effects of growing inequality, widespread insecurity, dying ecosystems and austerity policies.

Neoliberalism is now reaping the whirlwind. The inherent clash between democracy and capitalism came to the fore when public anger replaced the earlier hopefulness. This conflict arises as the majoritarian principle of democracy clashes with the private-ownership principle of capitalism that concentrates wealth and income. This concentration of economic and political power, when it becomes extreme as it has today, starkly contradicts the notion of political equality. The natural protective response of a politically vulnerable plutocracy in these circumstances is an authoritarian and divisive ethnic nationalism and cultural conservatism – right-wing populism in its various cultural guises. In the event of a severe crash instigated by an out-of-control financial system, this populism can mutate into a deadlier neofascism.

Sowing the Wind

Resurgent since the late 1970s, neoliberalism wielded the myth of the free market to restore the privilege and power of the top one percent. Whether the progenitors of neoliberalism intended to restore class privilege is immaterial. What matters is that it did so – and, in doing so, received the embrace of the rich and powerful globally.

Neoliberalism is best understood against the backdrop of the nationally regulated capitalism of the Keynesian/Cold War era. Memories of the destruction wrought by the Great Depression and World War II justified a range of economic controls, most importantly, on cross-border capital movements. The era was one of growing and broader, if not inclusive, prosperity. The universalistic welfare state and a more egalitarian distribution of wealth and income were enormous achievements, dependent to a large extent on a relatively large and organized working class.

But stagflation in the 1970s provided a political opening for the neoliberals, who had bided their time in foundations, think-tanks and university departments. The self-regulating market would, they promised, usher in a new era of prosperity and personal freedom.

Neoliberalism restored class power largely by limiting the power of elected governments to regulate the economy and the income/wealth distribution. Strong leaders – Pinochet, Thatcher, Reagan at the forefront – promoted the culture of a market society, including the values of individual freedom (market freedom was basic), self-reliance, personal responsibility, choice, commodification and happiness through consumption. But as a policy package, the doctrine relied heavily on reducing the inevitable tension between democracy and capitalism by shrinking the sovereign powers of democratic national governments. For instance:

  • Central banks were made independent and control of inflation, not full employment, was to be their major goal.
  • Capital account deregulation, together with new bank regulations, allowed finance capital to move globally in an instant and engage in speculation.
  • “Free” trade agreements allowed corporations to move production facilities abroad, while protecting intellectual property rights.
  • Investor-state dispute settlement clauses in trade agreements empowered private corporations to sue governments for policies or actions that “unjustifiably” restricted their profits.
  • Economic decision-making gravitated to largely unaccountable regional and international agencies where neoliberal technocracy held sway.

In these and other ways, the myth of free markets underpinned the concentration of wealth and income, above all in the hands of a financial elite.

A mutually reinforcing spiral typically emerges. The greater the concentration of wealth, the higher the plutocracy’s political influence, and the more biased in its favour is economic policy. The vectors of such influence are well-know but bear repeating:

  • campaign and party financing,
  • legions of lobbyists,
  • public opinion campaigns,
  • the use of fake “civil society organizations” to popularize corporate economic interests as the universal good,
  • foundations and think-tanks devoted to advancing neoliberal policies,
  • the induction of plutocrats into governmental office.

Hence,  fiscal, monetary and social policies tend to be class-biased. One example: monopoly laws are unevenly applied. On the one hand, trade unions come in for rough treatment in many countries. On the other hand, limited enforcement of anti-monopoly laws allow  giant transnational corporations to emerge, whose “foreign” trade involves mainly transactions among its globally scattered branches. But turbo-capitalism went too far

Reaping the Whirlwind

As long as a majority believed that, in the longer term, they too would benefit from the prosperity currently monopolized by the few, the conflict between democracy and capitalism remained low key. But the 2008 financial collapse destroyed the neoliberal illusion. The free market, far from efficiently and fairly allocating resources, brought inequality, economic insecurity, dangerous volatility and austerity. Worse, the plutocrats responsible for the widespread and prolonged pain both escaped punishment and continued to amass wealth and power.

The consequent widespread rage and disillusionment posed a political threat to the plutocracy. The majoritarian principle of democracy threatened the persistent concentration of wealth and influence in fewer hands. Climate change reinforces the tension through the influx, actual or imaginary, of migrants fleeing devastated landscapes, violence and collapsing states. In this context, the “natural” protective response of capital is the divisive ethnic and anti-globalist nationalism of right-wing populism. Conspiracy theories link shadowy global elites to machinations that devastate the working and middle classes while ushering in migrants who allegedly aoorioruate low-paid work and unearned welfare benefits. Populism squares the circle by reconciling democracy with capitalism via channeling white working class rage against distant elites and immigrants, allowing turbo-capitalism a new lease on life.

If economic and social conditions deteriorate, this amorphous far-right movement can morph into fascism. Fascism, or neofascism is it is commonly called, is a vague phenomenon that displays cultural variation from country to country. Nevertheless, the main principles remain constant: rejection of liberal and scientific values, authoritarian rule,  ethnic or religious fanaticism, scapegoating of minorities, and the acceptance, even glorification, of violence as the route to racial or religious “purification.”

It is not that many members of the plutocracy subscribe to these fascist values. It is more a matter of convenience: how do they divide and rule the angry majority in a purportedly democratic system? Fascism is a state-regulated and authoritarian form of capitalism that protects property rights. Plutocrats are thus tempted, when challenged, to ally with far-right populist leaders who hold sway over mass constituencies – especially if they mistakenly assume they can retain control.

What Is To Be Done?

Fascism is certainly not preordained. Neoliberalism and right-wing populism are not neofascism. This virulent virus emerges in times of severe economic and political crisis. We do not currently confront such harsh conditions in most countries of the global north. Moreover, liberal-democratic institutions are not easily swept aside. Citizens ultimately  possess agency, and a dense and well- organized civil society was ever the best defense against tyranny. Nevertheless, another world economic crisis, perhaps in combination with the dislocations occasioned by climate change or nuclear war, would generate such a crisis. That is the danger we face.

To counter this danger and  uncover new possibilities, we need a strong democratic left. This left would encompass a party or parties that champion popular policies and credibly appeal for the electoral support of  the non-racist segment of the far right. Ideally, the left would also include a movement of movements, able to mobilize people for nonviolent civic action. Of course, many obstacles impede the attainment of such a left. Political polarization and the association of social democracy with neoliberalism and austerity have propelled the centre-left into electoral free-fall.  What seems to be called for is a bolder democratic left, one that aims at more than ameliorating neoliberalism. But that is another story.

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About Richard

I am a Professor Emeritus of Political Science at the University of Toronto. I am currently interested in understanding how the humanistic tradition of the left can be adapted to fit the realities of the 21st century. I am particularly concerned with how we can deal equitably with the deadly challenge of climate change and live with globalization. My most recent academic research has focused on the Left’s experience in the Global South and on counter-hegemonic globalization. Africa has been the major site of my field work; I have also travelled widely in Latin America and Asia. My most recent books include Reinventing the Left in the Global South: The Politics of the Possible (2014), a revised and expanded edition of Civilizing Globalization: A Survival Guide (co-editor and co-author, 2014), and Social Democracy in the Global Periphery: Origins, Challenges, Prospects (co-author, 2007).

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